Forecasts for SGD to AUD
As the Singapore dollar (SGD) navigated a turbulent September, FX analysts observed early-month losses being partly recouped by the end of the month due to a decline in US yields. The local economic landscape—characterized by easing inflation and stymied growth—has led experts to widely predict that the Monetary Authority of Singapore (MAS) will retain its current monetary policy at the upcoming October meeting. This stability in policy is anticipated despite September witnessing the SGD fall to a 10-month nadir of US$0.7278 on 27th September. The weakness in the SGD has largely been attributed to the rallying US dollar, which strengthened on the back of a hawkish pause from the Federal Reserve. Nevertheless, some of these losses against the USD were mitigated as US treasury yields ebbed, offering the SGD a respite.
Turning attention to the Australian dollar (AUD), market analysts forecast strengthening in the medium term, particularly into 2024. This positive outlook is driven by expectations of a narrowed interest rate differential as other countries may potentially start cutting rates before Australia. In the latter months of 2022, the Reserve Bank of Australia (RBA)'s gradual rate hikes, when compared to its global counterparts, weighed on the AUD. Yet, market speculation in November suggests that the US may have reached its peak interest rates, while the RBA is postulated to persist with its tightening cycle, which could bode well for the AUD. As the currency of a dominant commodity-exporting nation, any variation in commodity prices and global trade policies notably influences the AUD's value. Additionally, the Aussie dollar's status as a barometer for global risk appetite means that trader confidence in worldwide economic growth can cause fluctuations in the AUD.
Recent price data for the SGD to AUD exchange rate places it near 90-day lows at around 1.1312, which is 1.2% below its three-month average of 1.1446. The exchange rate has been trading within a narrow 2.2% band from 1.1312 to 1.1560. This relative stability, juxtaposed with the current economic projections and monetary policy assumptions, suggests a cautious approach from those engaged in SGD to AUD transactions. Investors and businesses will likely keep a close eye on the MAS and RBA's next moves, alongside global commodity and risk sentiment shifts, to anticipate the future direction of this currency pairing.
